International trade and free trade chap16

Question 1

implications of international trade for a UK business…

Answer 1

• people in senior MUST use swot analysis for markets abroad
• some employees will have to be fluent in different languages
• have to comply with the requirements and standards of other countries to trade abroad

Question 2

UK businesses that export but not import…

Answer 2

If rate rises:
- foreign firms may pay more for the same product
- businesses could lower the prices
- businesses may choose to sell fewer products abroad
If rate falls:
- UK firms get less for the same product
- businesses could raise prices to maintain profits

Question 3

UK businesses that imports but not exports…

Answer 3

If rate rises:
- imports now become cheaper
- a business may choose to pass on savings to customers by cutting prices, or take advantage and take a larger profit margin
If rate falls:
- imports now become more expensive
- does a business raise prices? or accept lower profits

Question 4

Fall in exchange rate means that…

Answer 4

• the pound will buy less foreign currency than before
• UK exports become cheaper
• imports into the UK become more expensive

Question 5

Rise in exchange rate means that…

Answer 5

• the pound will buy more foreign currency than before
• UK exports become more expensive
• imports into the UK become cheaper

Question 6

Multinational vs international

Answer 6

multinational: Sells and operates in other countries.
international: Exchange of capital, goods and services across the boarders of different countries.